Headline News from Last Week

FHFA House Price Index – FHFA prices rose 0.4% in May, but the year-on-year rate slowed by 0.6 to 5.5%.

Existing Home Sales – Home sales picked up sharply in the second quarter following a lull in the first quarter. Sales of existing homes rose 2.6% in June to a higher-than-expected annual rate of 5.04 million.

MBA Purchase Applications – The purchase index edged 0.3% higher last week but followed an 8.0% decline in the prior week. Year-on-year, the index is down 15.0%.

Jobless Claims – Claims fell a very surprising 19,000 last week to a much-lower-than-expected level of 284,000.

New Home Sales – All regions showed declines in June with the most important region, the South, posting a 9.5% drop.

Mortgage Rates

According to the Primary Mortgage Market Survey released by Freddie Mac, average fixed-rate mortgage rates remained largely flat for the week.

30-year fixed-rate mortgages (FRMs) averaged 4.13% with an average 0.6 point for the week ending July 24, 2014, unchanged from last week. A year ago at this time, 30-year FRMs averaged 4.31%.

15-year FRMs this week averaged 3.26% with an average 0.6 point, up from last week when they averaged 3.23%. A year ago at this time, 15-year FRMs averaged 3.39%.

5-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 2.99% this week with an average 0.5 point, up from last week when they averaged 2.97%. A year ago, 5-year ARMs averaged 3.16%.

1-year Treasury-indexed ARMs averaged 2.39% this week with an average 0.4 point, unchanged from last week. At this time last year, 1-year ARMs averaged 2.65%.

Equity Market

The Dow Jones Industrial Average dropped 0.02% to close at 17,083.80. The S&P 500 increased 0.05% and closed at 1,987.98. The NASDAQ dropped 0.04% and ended the week at 4,472.11.

The Week Ahead

Monday, July 28

Pending Home Sales Index (10:00 a.m. ET) – The National Association of REALTORS developed the pending home sales index as a leading indicator of housing activity. Specifically, it is a leading indicator of existing home sales, not new home sales.

Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time.

Friday, August 1

Employment Situation (8:30 a.m. ET) – The employment situation is a set of market indicators based on two separate surveys. The unemployment rate equals the number of unemployed persons divided by the total number of persons in the labor force, which comes from a survey of 60,000 households.

Treasuries and mortgage bonds are lower from yesterday's close as a report showed that U.S. exports rose to a two-year high, shrinking the trade deficit in October more than economists had originally forecast.

Europe is in a debt crisis. It has been well documented over the past year that things aren’t looking good financially for the eurozone, and top economic officials are having a hard time cleaning up the mess that they are in. Where does Europe stand right now?

The 10-year treasury yield is at 1.92 percent today, relatively flat from yesterday. Yields will likely remain low while worries over momentum in the U.S. continue, and investors keep an eye on the European debt crisis.